Income Tax - Chapter VIA - Deduction from Gross Total Income ~ Roysahab My Digital Diary

Income Tax - Chapter VIA - Deduction from Gross Total Income

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CHAPTER VIA - gives deductions from gross total income. The important point to be noted is that if there is no Gross Total Income, then no deductions will be permissible. This is different from Income Exempted from Income Tax U/s. 10. They are totally exempted income and do not come to the computation process at all.

Here below we will discuss about some important section.

1) Section 80C :-

Under section 80C of the Income Tax Act, certain investments are deductible ( up to a maximum of Rs. 1 Lac) from, Gross Total Income. This tax exemption is available across individual tax slabs. If you earn Rs.5 Lac per annum and make investments of Rs. 1 Lac in Sec.80C instruments then the taxable amount will be Rs.4 Lac.

The following is section 80C deductions / exemption list.
LIC premium: Any Life Insurance premiums (for one or more insurance policies) paid by you for yourself, your spouse or your children is eligible under income tax deduction under section 80C of Indian Income Tax Act.
ELSS :- Any investment made in certain Mutual Funds called equity linked saving schemes qualifies for section 80C deduction. Please note that not all mutual fund investments are eligible for this deduction. Some examples of ELSS funds are – SBI Magnum Tax Gain, HDFC Tax Saver, HDFC Long term advantage, etc.
ULIP :- Investments made in certain ULIPs of Unit Trust of India and LIC of India are eligible for 80C deduction.
Bank Fixed Deposit OR Term Deposit of term greater than 5 years :- According to a relatively new provision amount saved in fixed deposits of term at least five years is eligible for income tax deduction under section 80C of Indian Income Tax Act.
Tuition Fees deduction under section 80C :- Amount paid as tuition fee for the education of two children of the employee / Tax Payer is eligible for deduction under section 80C of Indian Income Tax Act.

2) Section 80CCC :-

Section 80CCC provides deductions from gross (total) income for amounts paid or deposited by the assessee to any annuity plan of Life Insurance Corporation of India or any other insurer for receiving pension from the fund referred to in clause (23AAB).

3) Section 80CCD :-

The deduction for contributions to a pension scheme of the Central Government is available only to those individual who have been employed by the central government on or after 1st January 2004, and will be allowed for any amount deposited in such a pension scheme. But, in this case, deduction of more than 10 per cent of the employee's salary shall not be allowed.

4) Section 80D :-

Deduction under section 80D is available for medical claim policy by individual for family and HUF for their members.
Deduction on Medical insurance premium paid for himself, spouse, dependent children =Rs 15000 maximum.
Deduction on Medical insurance premium paid for parents, whether dependent on assessee or not =Rs 15000 maximum.

5) Section 80DD :-
If you are incurring expenditure for the treatment of your handicapped dependent, you could claim a deduction under section 80DD.

Available Deduction - Rs 50000, or actual expenditure incurred, whichever is lesser. For severe handicap conditions Rs. 1,00,000 is the deduction limit Deduction can be claimed for dependent parents, spouse, children and siblings. Dependents must not have claimed any deduction for their disability.
Deduction in respect of investment in eligible long-term infrastructure bonds. Maximum Deduction available Rs. 20000/-

6) Section 80DDB :-

Costs incurred for treatment of specified illnesses, could fetch you a tax benefit under section 80DDB. For individual assesses less than 65 years of age, a deduction limit of Rs. 40,000 is applicable. For a senior citizen, the limit is Rs. 60,000.Deduction is applicable for treatment of self, spouse, children, siblings, and parents, wholly dependent on you.

Diseases covered under 80DDB.

a) Neurological Diseases (where the disability level has been certified as 40% or more).
b) Parkinson’s Disease
c) Malignant Cancers
d) Acquired Immune Deficiency Syndrome (AIDS)
e) Chronic Renal failure
f) Hemophilia
g) Thalassaemia

7) Section 80E :-

If you have taken an education loan from any financial institution or an approved charitable institution, Section 80E provides a tax deduction on the loan interest that you are paying. The entire interest paid on the education loan could be used to claim a deduction. There is no cap on the deduction amount. However, one needs to remember, that there is no tax benefit on the principal repayment of the loan.

8) Section 80G :-

Under section 80G deduction is available to any tax payer (may be individual, company, firm or any other person) making donation to the company. 50% of the donation made is allowed to be deducted from the taxable income and consequently tax is calculated.
A certificate under Section 80G will be issued by the Company to the tax payer making the donation to enable them to claim the exemption from Income Tax.

9) Section 80GG :-

Do you pay rent but don’t get a house rent allowance (HRA)? Don’t think you cannot get any income tax benefit. You can qualify to save tax under section 80GG of the Income Tax (IT) Act if you satisfy certain conditions. Any individual can claim the deduction u/s 80GG. Irrespective of whether you are a salaried individual, or a business person, you can claim deduction under Sec 80GG.
80GGA : - Deduction in respect of certain donations for scientific research or rural development.
80GGC : -Deduction in respect of contributions given by any person to political parties
80RRB : - Deduction in respect of royalty on patents

10) Section 80TTA:-
This section is applicable from 01.04.2013 onwards. Section 80TTA is proposed to be introduced to provide deduction to an individual or a Hindu undivided family in respect of interest received on deposits (not being time deposits) in a savings account held with banks, cooperative banks and post office. The deduction is restricted to Rs 10,000 or actual interest whichever is lower.

11) Section 80U :-

Do you have a disability? Are you handicapped in any way? If yes, you can have some benefit in income tax under sec 8OU
The deduction allowed is Rs. 50,000 or Rs. 75,000 depending on the extent of your disability. A deduction of Rs. 50,000 is generally allowed if you have a disability, but it increases to Rs. 75,000 if your disability is severe.

Income Tax - Chapter VIA - Deduction from Gross Total Income

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This post was written by: Pradip Roy

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